EXHIBIT 10.40
INTERCORPORATE SERVICES AGREEMENT
This INTERCORPORATE SERVICES AGREEMENT (the "Agreement"), effective as of
January 1, 1996, amends and supersedes that certain Intercorporate Services
Agreement effective as of January 1, 1995 by and between VALHI, INC., a Delaware
corporation ("Valhi"), and NL INDUSTRIES, INC., a New Jersey corporation ("NL").
Recitals
Employees and agents of Valhi and affiliates of Valhi perform
management, financial and administrative functions for NL without direct
compensation from NL.
NL does not separately maintain the full internal capability to
perform all necessary management, financial and administrative functions that NL
requires.
Valhi desires to have the services of certain personnel of NL and NL
is willing to provide such services under the terms of this Agreement.
The cost of maintaining the additional personnel necessary to
perform the functions provided for by this Agreement would exceed the amount
charged to such party that is contained in the net fee set forth in Section 4 of
this Agreement and that the terms of this Agreement are no less favorable to
each party than could otherwise be obtained from a third party for comparable
services.
Each party desires to continue receiving the management, financial
and administrative services presently provided by the other party and its
affiliates and each party is willing to continue to provide such services under
the terms of this Agreement.
Agreement
For and in consideration of the mutual premises, representations and
covenants herein contained, the parties hereto mutually agree as follows:
Section Valhi Services to be Provided. Valhi agrees to make available to
NL, upon request, the following services (the "Valhi Services") to be rendered
by the internal staff of Valhi and affiliates of Valhi:
Consultation and assistance in the development and
implementation of NL's corporate business strategies, plans and
objectives;
Consultation and assistance in management and conduct of
corporate affairs and corporate governance consistent with the charter and
bylaws of NL;
Consultation and assistance in maintenance of financial
records and controls, including preparation and review of periodic
financial statements and reports to be filed with public and regulatory
entities and those required to be prepared for financial institutions or
pursuant to indentures and credit agreements;
Consultation and assistance in cash management and in
arranging financing necessary to implement the business plans of NL;
Consultation and assistance in tax management and
administration, including, without limitation, preparation and filing of
tax returns, tax reporting, examinations by government authorities and tax
planning; and
Such other services as may be requested by NL from time to
time.
Section NL Services to be Provided. NL agrees to make available to Valhi,
upon request, the following services (the "NL Services," and collectively with
the Valhi Services, the "Services") to be rendered by the internal staff of NL:
The services of Joseph S. Compofelice to act as Executive Vice
President of Valhi, which Valhi and NL agree shall involve substantially
such time as has been allocated in the past and is currently being
devoted;
The services of NL's internal audit personnel in providing
consultation and assistance in performing internal audit projects as
requested from time to time; and
Such other services as may be requested by Valhi from time to
time.
Section Miscellaneous Services. It is the intent of the parties hereto
that each party to this Agreement provide (a "Providing Party") only such
Services as are requested by the other party (a "Receiving Party") in connection
with routine management, financial and administrative functions related to the
ongoing operations of the Receiving Party and not with respect to special
projects, including corporate investments, acquisitions and divestitures. The
parties hereto contemplate that the Services rendered by a Providing Party in
connection with the conduct of each Receiving Party's business will be on a
scale compared to that existing on the effective date of this Agreement,
adjusted for internal corporate growth or contraction, but not for major
corporate acquisitions or divestitures, and that adjustments may be required to
the terms of this Agreement in the event of such major corporate acquisitions,
divestitures or special projects. Each Receiving Party will continue to bear all
other costs required for outside services including, but not limited to, the
outside services of attorneys, auditors, trustees, consultants, transfer agents
and registrars, and it is expressly understood that each Providing Party assumes
no liability for any expenses or services other than those stated in this
Agreement to be provided by such party. In addition to the amounts charged to a
Receiving Party for Services provided pursuant to this Agreement, such Receiving
Party will pay the Providing Party the amount of out-of-pocket costs incurred by
the Providing Party in rendering such Services.
Section Net Fee for Services. Valhi agrees to pay to NL a net fee of
$2,500 quarterly, commencing as of January 1, 1996, pursuant to this Agreement,
which net fee includes reimbursements of $36,000 for certain NL Services
provided in 1995. In addition to the net fee:
Valhi shall pay to NL an additional amount equal to the sum
of:
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the product of (x) $600, (y) the number of days devoted by
NL's internal auditors to providing NL Services described in
Subsection 2(b) and (z) the number of internal auditors providing
such NL Services; and
all related out-of-pocket expenses;
Valhi shall pay to NL additional amounts plus all related
out-of-pocket costs, all as agreed to by the parties, for all NL Services
provided under Subsection 2(c); and
NL shall credit or pay to Valhi additional amounts plus all
related out-of-pocket costs, all as agreed to by the parties, for all
Valhi Services provided under Subsection 1(f).
Section Original Term. Subject to the provisions of Section 6 hereof, the
original term of this Agreement shall be from January 1, 1996 to December 31,
1996.
Section Extensions. This Agreement shall be extended on a
quarter-to-quarter basis after the expiration of its original term unless
written notification is given by Valhi or NL thirty (30) days in advance of the
first day of each successive quarter or unless it is superseded by a subsequent
written agreement of the parties hereto.
Section Limitation of Liability. In providing Services hereunder, each
Providing Party shall have a duty to act, and to cause its agents to act, in a
reasonably prudent manner, but no Providing Party nor any officer, director,
employee or agent of such party nor or its affiliates shall be liable to a
Receiving Party for any error of judgment or mistake of law or for any loss
incurred by the Receiving Party in connection with the matter to which this
Agreement relates, except a loss resulting from willful misfeasance, bad faith
or gross negligence on the part of the Providing Party.
Section Indemnification. Each Receiving Party shall indemnify and hold
harmless the Providing Party, its affiliates and their respective officers,
directors and employees from and against any and all losses, liabilities,
claims, damages, costs and expenses (including attorneys' fees and other
expenses of litigation) to which such Providing Party may become subject arising
out of the Services provided by such Providing Party to the Receiving Party
hereunder, provided that such indemnity shall not protect any person against any
liability to which such person would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence on the part of such person.
Section Further Assurances. Each of the parties will make, execute,
acknowledge and deliver such other instruments and documents, and take all such
other actions, as the other party may reasonably request and as may reasonably
be required in order to effectuate the purposes of this Agreement and to carry
out the terms hereof.
Section Notices. All communications hereunder shall be in writing and
shall be addressed, if intended for Valhi, to Three Lincoln Centre, 5430 LBJ
Freeway, Suite 1700, Dallas, Texas 75240, Attention: President, or such other
address as it shall have furnished to NL in
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writing, and if intended for NL, to Two Greenspoint Plaza, 16825 Northchase
Drive, Suite 1200, Houston, Texas 77060, Attention: President, or such other
address as it shall have furnished to Valhi in writing.
Section Amendment and Modification. Neither this Agreement nor any term
hereof may be changed, waived, discharged or terminated other than by agreement
in writing signed by the parties hereto.
Section Successor and Assigns. This Agreement shall be binding upon and
inure to the benefit of Valhi and NL and their respective successors and
assigns, except that neither party may assign its rights under this Agreement
without the prior written consent of the other party.
Section Governing Law. This Agreement shall be governed by, and construed
and interpreted in accordance with, the laws of the State of Texas.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the date first above written.
VALHI, INC.
By: /s/ Steven L. Watson
Steven L. Watson
Vice President
NL INDUSTRIES, INC.
By: /s/ J. Landis Martin
J. Landis Martin
President and Chief Executive Officer
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